QUESTION 6 Brazos Company issued a 3-year, 5%, note payable for $75,000 on Janua

Question

QUESTION 6

Brazos Company issued a 3-year, 5%, note payable for $75,000 on January 1, 2013. The note requires that Brazos make equal payments to principal on December 31 each year, plus interest on the unpaid balance.

What amount of interest expense will Brazos Company report for 2103?

$7,500

$3,750

$2,500

$0

none of the above

Refer to the information above for Brazos Company. What is the total amount of interest expense that Brazos will report over the 3-year life of this note?

$22,500

$11,250

$7,500

$1,250

none of the above

$7,500

$3,750

$2,500

$0

none of the above

Explanation / Answer

Answer 1: Answer B is correct Brazos company pay interest for first year

75000*5%= $ 3750

Answer 2 : Answer C is correct

Brazos paid the interest for 1st year 75000*5% = 3750

Brazos paid the interest for 2nd year 50000*5% = 2500

Brazos paid the interest for 3rd year 25000*5% = 1250

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Total Interest Paid 7500

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